Twenty-nine people were killed in the Omagh bomb attack in 1998. Photograph: Paul McErlane/PA

An agent working for the FBI and MI5 who infiltrated the Real IRA was branded a "pathological liar" at a court case today aimed at overturning a judgment against four dissident republicans accused of organising the Omagh bomb massacre.

The credibility of David Rupert, an American who posed as a gunrunner for the terror group, came under sustained attack inside the court of appeal in Belfast.

His intelligence transcripts for the FBI and MI5 were used in the civil action against the Real IRA founder, Michael McKevitt, and three other men, Liam Campbell, Colm Murphy and Seamus Daly.

They were found to be responsible for the terrorist attack in a landmark civil case brought by victims' families at Belfast high court in June 2009. The judge recommended that they pay out £1.6m in compensation to the victims' families.

Twenty-nine people were killed in the attack, in County Tyrone, and dozens more were injured. It was the single biggest atrocity of the the Troubles.

The legal team representing the four men today raised doubts in opening statements about the credibility of the Rupert intelligence reports. The trucker, who it was pointed out also has criminal convictions in the US, never gave evidence himself in the original civil court case. The legal team also pointed to missing intelligence material that was not produced in the original civil action in their bid to have the ruling overturned.

"Mr Rupert is a pathological liar and a confidence trickster, and a man who, it was very strongly submitted [at the civil case], a submission based on forensic investigation, engaged in serial perjury in the course of giving his evidence in the Dublin trial," he said.

O'Higgins said the fact Rupert had not given evidence in the civil case denied McKevitt an opportunity to cross examine the witness.

The barrister said the evidence was circumstantial, the findings of the court were tainted and the end result was flawed.

The latest legal challenge over the case at the court of appeal could last up to two weeks.

Among those attending the opening day of the appeal was Stanley McCombe, whose wife, Anne, was one of those who died in the bombing.

The Omagh families took their civil action to the high court in Belfast police failed to secure a criminal conviction over the 1998 bombing.

They sued five men and the Real IRA for up to £14m in a case that made legal history evidence was heard in both Belfast and Dublin.

The campaign by the 12 Omagh relatives to take the civil action won the support of the Bill Clinton, the former Northern Ireland secretaries Peter Mandelson and Sir Patrick Mayhew, the musician Bob Geldof and the boxer Barry McGuigan.

The families are also appealing against part of the June 2009 judgment in the court of appeal.

Michael Gallagher, whose son Aiden died in the car bomb attack, said the families' appeal against the compensation case would be heard alongside that of the four dissident republicans challenging the findings of liability.

Gallagher said: "We are appealing the amount that was awarded.

"We were awarded compensation but believed the court should have awarded exemplary damages."